Preliminary Overview of the Economy of Latin America and the Caribbean

1684-1417 (online)
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This publication appears at the end of each year. It contains a description and asessment of the economic performance of the region during the year and provides updated, detailed information about the evolution of macroeconomic variables in the region as an aggregate and in most individual countries. It stands as the earliest source of information on the region's economic performance for the entire year. The reports includes a Regional Panorama based on a global and sectoral approach; growth projections for the following year are included. Additionally, individual country chapters cover the economies in Latin American and a the Caribbean. This document is prepared by the Economic Development Division in collaboration with the Statistics Division and the subregional and national offices of the ECLAC.
Preliminary Overview of the Economies of Latin America and the Caribbean 2012

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10 Apr 2013
9789210560108 (PDF)

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This publication shows that the global economic crisis has had a negative, albeit not dramatic, impact in the Latin America and the Caribbean region. Global financial instability led to smaller inflows of short-term capital and a more volatile exchange rate in Brazil and Mexico, but eased pressures towards currency appreciation. Monetary policy was slightly expansionary. The fiscal position deteriorated in most countries, but fiscal policies have remained predominantly prudent. The region’s economy proved resilient, despite the global economic downturn. Employment and wages rose, with unemployment falling more among women than among men, but there are signs that growth in “quality” employment has slowed. The outlook for 2013 is again for lacklustre and uncertain external conditions.
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  • Executive summary
    The global economy slowed significantly in 2012, amid recession in Europe caused by financial, fiscal and competitiveness imbalances, especially in the eurozone, as well as the slowdown in China and moderate growth in the United States. Growth rates for output and global trade fell and capital flows to developing countries shrank and became more volatile.
  • The external sector
    Growth in the global economy fell slightly from 2.7% in 2011 to 2.2% in 2012. The main reason was the recession in a number of eurozone countries and its consequences for Asia and Latin America, which grew less briskly than they had in 2011, albeit still faster than the global economy as a whole. Although there were improvements in the United States and Japanese economies, these were not enough to offset the slackening performance in Europe.
  • Fiscal and monetary variables
    In 2012, the fiscal balances of the region’s countries deteriorated relative to 2011, mainly because of public spending growth. In Latin America, primary balances (before interest payments on the public debt) averaged a deficit of 0.3 percentage points of GDP, as compared to a surplus of 0.2 percentage points in 2011, while overall balances (including interest payments) yielded a negative result of 2 percentage points of regional GDP (see table II.1 and the statistical annex).
  • Performance of the domestic economy: Activity, employment and wages
    With the global economy faltering, the slowdown observed in the region’s economies throughout 2011 continued in 2012, although the results varied from one country to the next. GDP in Latin America and the Caribbean rose by 3.1%, resulting in a 2.0% increase in regional per capita GDP. The region’s performance is due mainly to lower growth in two of its major economies: Argentina (2.2% in 2012, down from 8.9% in 2011) and Brazil (1.2% compared with 2.7% in 2011) (see figure III.1).1 Without these two countries, the rise in regional GDP would have been 4.3%, a figure similar to the previous year’s excluding those two countries (4.5%).
  • Outlook for 2013
    The economic outlook for Latin America and the Caribbean depends to a large extent on how the world economy evolves in 2013. Significant progress was made in tackling the crisis in the eurozone countries in 2012, with agreements reached on the establishment of an institutional framework for promoting greater fiscal discipline and the formation of a single banking supervisor. The process of adopting and implementing these reforms in each country is complex and time-consuming. In the short term, the policy shift at the European Central Bank strengthened sovereign debt liquidity and succeeded in stabilizing this market, but problems of public debt sustainability persist. Moreover, borrowing requirements are expected to continue to rise in 2013, and will be exacerbated by the economic downturn. Although the adjustment processes have reduced the external disequilibria, in some cases the lack of competitiveness, an underlying, long-term problem and a key trigger of the crisis, remains to be resolved. Lastly, while some advances have been made, the challenge remains to restore financial system solvency and improve portfolio quality, which is a prerequisite for reviving the credit market. Recent studies suggest that this could start to occur in 2014.1 In this context, the most likely scenario for 2013 is that Europe will continue to experience low growth with some countries even remaining in recession.
  • Statistical annex
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